Toronto's Nutritional High International Inc. closed its previously announced acquisition of Sacramento, Calif.-based Pasa Verde LLC.
Pasa Verde operates a cannabis extraction and toll processing facility.
The seller received US$250,000 upon closing, and will get US$500,000 more upon providing documentation of receipt of certain local approvals.
Nutritional High will also issue US$900,000 of its common stock, representing 3,094,560 shares at 38 Canadian cents each. The shares will be released from escrow once the vendor secures a Sacramento business operating permit, or submits certain construction permit applications or material changes to pending applications.
The vendor also is entitled to receive up to US$5.3 million in cash and shares under a 2-year earn out period, based on the achievement of mutually agreed-upon annual gross revenue targets. Further, Pasa Verde vendor Tony Westfall will join Nutritional High's senior management team.
Nutritional High agreed to fund up to US$456,000 of Pasa Verde's growth costs, subject to adjustment.
Concurrently, Nutritional High acquired a 9,000 square-foot Sacramento property, permitted for the manufacture of cannabis extracts and infused products. The US$775,000 property, in tandem with Pasa Verde, will form Nutritional High's Northern California manufacturing hub.
"We believe these assets will help us to secure our supply chain and further develop our suite of value added product offerings to the California marketplace," David Posner, Nutritional High's chairman, said in a news release.
FMI Capital Advisory Inc. acted as Nutritional High's exclusive financial adviser for the Pasa Verde acquisition.
Nutritional High develops and manufactures cannabis-infused products such as edibles and oil extracts for nutritional, medical and adult recreational use.